Apartments leading the way for homebuyers

Tempe launched the Valley's latest apartment development spree a few years ago, when new high-end complexes started going up around the city's lake and Arizona State University.

Now, long-vacant prime parcels in downtown and midtown Phoenix are sprouting new apartment complexes. And older buildings in central Phoenix and Scottsdale are being torn down to make way for new apartments and condominiums.

Tom Simplot, CEO of the Arizona Multihousing Association and a former Phoenix councilman, told me apartments lead the way for people to buy homes in an area.

"People first became comfortable living in central Phoenix by renting," he said. "Those of us living downtown are no longer urban pioneers, and we welcome all the new people and growth, whether rental or homeowners."

Rents are climbing in many big U.S. metros, but Phoenix saw the fourth-biggest U.S. increase in rents during the summer, per RealPage stats. Sacramento was No. 1 with an almost 10 percent jump. Portland and Seattle saw increases of more than 8 percent.

Phoenix’s almost non-stop increase during the past two years is a bit unusual.

“Two years of almost nothing but increases in average rent is just about unheard of, given seasonal cycles and volatility in most metros,” said Stephanie McCleskey, vice president of research for Axiometrics.

She cites the Valley’s job growth as a big reason behind the area’s long streak of rent increases.

About 70,000 new jobs were added in metro Phoenix during the past year.

And now there aren’t a lot of empty apartments to choose from in the Valley. Only about 5 percent of the area’s rentals are vacant.

Salaries are also climbing in the Valley, but not as fast as rents.

The average rent on a Valley apartment is up almost 8 percent from last year.

Wages are up 2.4 percent in metro Phoenix, according to the U.S. Bureau of Labor Statistics.

Will pricey complexes draw enough renters?

Developers are upping apartment amenities to draw more people willing to pay higher rents.